4-hour timeframe
The amplitude of the last 5 days (high-low): 118p - 78p - 78p - 102p - 44p.
Average amplitude for the last 5 days: 84p (98p).
The EUR/USD currency pair fell by 150 points on the first trading day of the new 2019. Moreover, this collapse was not caused by the weakening of the euro, but by the growth of the US currency. As you can see, the market continues to be very "sensitive", which is reflected in the chart by such strong movements, although today there were no significant prerequisites for such a critical fall. Moreover, even when there were grounds, the pair did not always decline by such a large number of points. It seems that at the end of last year, traders were only engaged in closing dollar positions, realizing that there should be a correction, plus taking some of the profit. With the beginning of the new year, market participants resumed buying the US dollar, which still has much more reason to strengthen than the euro. While there was no important macroeconomic information at the disposal of traders, it remains unclear whether the pair's sales will continue below the December 12 low? And this is a key question for the pair. Today's collapse does not mean that sales will continue tomorrow. Thus, the instrument may well remain within the side channel with a minimal upward slope and frequent corrections. The index of business activity, published today in the eurozone, fully coincided with the forecast (51.4) and had no impact on the mood of traders. In the second half of the trading week, it will be very interesting to observe the behavior of the pair, since we believe that today's collapse is short-term and unfounded.
Trading recommendations:
The EUR /USD pair has started a downward movement and has completed the level of support. After such a strong fall, it will be extremely difficult to track the beginning of the correction using the MACD indicator. A correction is very likely. Shorts, therefore, are now relevant for the purpose of 1,1289, but you need to be ready for a correction.
Buy positions can again be considered no earlier than the price fixing above the critical line. In this case, the euro will have new chances for a slight strengthening.
In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.
Explanation of illustration:
Ichimoku Indicator:
Tenkan-sen-red line.
Kijun-sen – blue line.
Senkou span a – light brown dotted line.
Senkou span B – light purple dotted line.
Chikou span – green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com